Three-quarters of pensioners admit they have no back-up plan if the stock market slumps, according to a survey conducted by retirement specialists Responsible Life.

Furthermore, 95% of pensioners are worried about their standard of living and retirement plans crumbling if shares continue to slide.

More than half (55%) now wish they had bought an annuity offering guaranteed income.

The UK economy could be heading for its worst year for growth in almost a decade as uncertainty over Brexit lingers.

Laith Khalaf, senior analyst, Hargreaves Lansdown says: “Investors are in grim mood, as time is running out on Brexit negotiations with little progress on show. Sentiment was dented by the financial crisis, but not to the extent we are seeing today.

That’s perhaps because the crisis unfolded in an unscheduled fashion, while the timeline on the UK’s withdrawal from the EU is there for all to see. A looming early Budget and a stormy October on the markets will do little to settle nerves.

“These are challenging times for investors who are faced with a significant known unknown in the form of Brexit. In such circumstances, it’s worth falling back on the basics of investing. That means taking a long term perspective, keeping diversified, and drip feeding money into the markets to take advantage of any dips.”

Investor confidence sinks to 23 year low

According to the HL Investor Confidence Index (which measures the confidence of retail investors in the UK stock market), investor confidence has hit a new record low, dropping 5 points, from a reading of 58 in September to 53 in October.

Investors’ confidence in North America has risen, whilst confidence in all other markets has dropped or remained constant.

Source: HL Lansdown

Brexit remains top of the list of investors’ worries, with general global instability, the UK’s productivity problem and the potential for inflation also registering as causes for concern.

Financial downturn worsens?

The majority of pensioners are fearful of their standard of living if the financial downturn worsens, and more than half (55%) now wish they had taken out an annuity.

Nearly 9 in 10 (89%) use their pension as their main source of income and 40% say they would have to reduce the amount they take out of their pension, or stop altogether, if securities drop.

Of those pensioners who said they did have other savings and/or investments to turn to during a stock market downturn, 30% admitted there wasn’t much in these accounts and these reserves would be used up quickly if they had to rely on them.

Nearly two thirds (61%) of retirees have kept their personal pension invested, the study shows, and 80%of them say they have little choice but to keep drawing from it even if its value plummets.

Sabuhi Gard is an investment writer at Incisive Works

Further viewing on this topic:

Video: How to plan for retirement